After setting a new record last Friday, Indonesia's main stock index (IHSG) lost its strength on Monday (13/05/13). A number of factors were behind the decline. Foreign investors mostly sold their Indonesian assets as the record high level of the IHSG made it tempting to engage in profit taking. Moreover, the still unclear policy regarding Indonesia's subsidized fuel causes uncertainties. Lastly, Asian stock indices were mixed while European indices opened lower on Monday.
Today, Indonesia's IHSG - the main indicator of financial market performance in Indonesia - lost 1 percent and ended on the level of 5,054.63 points. Contrary to foreign investors, domestic market participants continued adding Indonesian stocks to their portfolios.
The IDR rupiah fell due to the weakening Yen. At last week's G7 meeting, Japan met no resistance to its policy by G7 members. The currency has hit a four-year low against the US dollar. Market participants are also anticipating on a halt to the Federal Reserves bond-buying program.| Source: Bank Indonesia
Asian indices were mixed. Japan's Nikkei rose strongly as the G7 tolerates the weakening of the Yen. It convinces market participants that the G7 group is committed to support global economic growth. Members of the G7 also stressed to remain focused on unfinished banking reforms. But these positive sentiments did not last for long as market participants in China started to reduce their stock portfolios after China's stock index hit a record high.